Under the assumption that the average income of an age group is
independent of the population weight of that group, this study aims to estimate
the effects of changes in population structure on income inequality using the
squared coefficient of variation (SCV) with the Household Income and
Expenditure Survey between 1982 and 2008.
The SCV dropped significantly from 0.328 to 0.208 during 1982～1994
period. The sharp decrease in the SCV was mostly due to the change in
income distribution. To the contrary, the changes of population structure and
income distribution explain 14.9% and 85.1% of SCV changes respectively,
during 1994～2008 period. A simulation result suggests that population aging
will increase income inequality by 7.5% by 2018 and 27.5% by 2050, even
without any further change in income distribution.